Taxing matters

The HST debate in Manitoba has subsided for the moment with Premier Greg Selinger (sorry – still not used to that one) and Finance Minister Rosann Wowchuk (nope, not used to that one yet either) ruling it out. Well at least for now.

But the harmonized sales tax is still bubbling fairly loudly on Parliament Hill and I’d wager a bet, it’s one of the more top-of-mind issues in B.C. and Ontario right now. At Queen’s Park in Toronto, two Conservative MPs refused to leave the chamber for two days in protest of the lack of consultation they say was associated with the new tax.

The Ottawa Citizen has been running a special series on the topic the last few days, explaining it’s impetus, it’s impact and the political ramifications.

One thing stood out to me.

A poll found 74 per cent of Ontarians and British Columbians are against the idea of an HST. They see it as a cash grab. Yet economists on both sides of the political spectrum believe it is a good thing. An analysis by University of Calgary economist Jack Mintz is highly touted by Premier Dalton McGuinty as it suggests the HST will help create 591,000 jobs over the next decade and help push annual incomes up 8.8 per cent.

The downside of it is that while businesses pay less, consumers will pay more. And although income tax cuts and one-time cash offset payments from the government are being offered, consumers are still going to feel a pinch.

It brings me to an interesting plight of politics. Sometimes the right thing to do is not the popular thing to do. Businesses don’t vote. People do. There will be some business owners who are thrilled with this, but the vast majority of voters aren’t business owners. They’re people who will suddenly find it is costing eight per cent more to keep your house warm in the winter, fill the car with gasoline or get a haircut.

It obviously remains to be seen whether Ontario and B.C. consumers will cut back on their spending because of the HST next year, or whether it truly will deliver the promised economic rewards.
I will say this.

It is a bold move.

This day and age that is a rare phenomenon.

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